The politics of development agencies and revenue sharing

The peculiarities of the Niger Delta problem attracted the developmental attention of governments from colonial periods to period of Independence. In the colonial days, Her majesty’s government set up the Sir Henry Willinks’s Commission to recommend the best strategy for the development of the region which has the most difficult terrain in the country. When the commission turned in its report in 1958, it specially recommended that the Niger Delta Region deserves special developmental attention and should, therefore, be made a special area to be developed directly by the federal government. This was before the oil became the main stay of the Nigerian economy. The recommendation of the reports gave birth to the Niger Delta Development Board (NDDB) in 1960 to cater for the area. The NDDB was moribund before the out break of the civil war seven years ago. After the civil war, the River Basin Development Authority was established to promote regional development for which the Niger Delta region was to benefit.⁶³ Akpan and Akpabio see the gesture as a negation of the developmental ideas for the Niger Delta as contained in the Willink’s Commission’s report.⁶⁴ As a consequence, the people continued to agitate for the restoration of the Willink’s Commission’s dream by requesting special attention to be paid to their developmental needs. This later led to setting up of a presidential Task Force which devoted 1.5 percent of the Federation. Account to the development of the Niger Delta region. The impact of this was menial on the region and could not settle the growing restiveness and developmental needs of the people. Following the recommendation of the Belgore Commission set up by the Babangida’s regime. The Mineral Producing Area Development Commission (OMPADEC) was established in 1993. However, OMPADEC could not make any significant progress in the development of the region due to several factors namely: Lack of master plan, inadequate funding, and official corruption. The failure of these development interventions prompted the establishment of the Niger Delta Development Commission (NDDC). The NDDC Act provides several sources of funding. These include:

• Federal government contribution, which shall be equivalent to 15% of the monthly statutory allocations due to member states of the commission from the federation account.
• Oil and Gas processing companies’ contribution of 3% of their total budget.
• 50% of the ecological fund allocations due to member states.
• Proceed from other NDDC assets and
• Miscellaneous sources, including grants-in-aid, gifts, interest on deposits and investments loans by federal and state governments and any local or foreign bodies, donations etc.

Amendment to this was later effected to make all the member-states contribute 10 percent of their monthly statutory allocation to the commission. There is no clear provision holding the FGN exclusively responsible to NDDC, other than contributions drawn from statutory revenues of the Niger Delta States and ecological fund. The arguments here are two – fold. First, the development of the Niger Delta region deserves very special attention since the federal government has control of its resources. Second, there is absolute need to separate: 1) ecological problems from infrastructural provisions; 2) generate states revenue from special and dedicated funds for the NDDC. The implication of the above arrangements is that the Niger Delta States and ecological funds have been indirectly used to fund the NDDC, while the FGN tactically dodges its developmental responsibilities to the region.

This is tantamount to playing politics with the development needs of the Niger Delta. A look at the history of fiscal revenue allocation formula in Nigeria from 1954 to date shows that the Niger Delta region has not received its fair share of developmental “dividends” of the FGN.

Population and equality are the major criteria for resource allocation in Nigeria. Other criteria, though of lesser importance, are land size, internal revenues effort and social development. Derivation was 100% between 1954 and 1959 and was suspended from thence forth.

Table: Criteria for revenue sharing among Nigerian States (1960 – 1999)

Source: Adopted from Ikporukpo (1996); Aaron (2003) and cited by Akpan and Akpabio (2003)⁶⁵

Derivation principle in resource allocation resurfaced in 1999 when 13% was inserted to cater for resource endowed areas. The politics in this is the regional control over resources in the Niger Delta was strong (100%) when groundnuts, cocoa and palm oil became the mainstay of the economy. These three resources came from the three main ethnic regions of Nigeria namely the north (Hausa); the South West (Yoruba) and the South East (Igbo). When oil was discovered in the 70’s as the life wire of Nigeria’s economy, regional control over resources was de-emphasized. For instance, in 1977, Obasanjo as a military ruler reduced regional control of resources to 25 percent. Subsequent military government further reduced it and eventually to 1 percent. With the agitation of minorities from the oil region, it has seen risen to 3 percent and then to 13 percent as approved by the 1999 constitution.⁶⁶ Even with this, there is still politics surrounding the 13 percent constitutional provision to states in the Niger Delta. The introduction of on shore / off shore oil revenue dichotomy has been politically used to further reduce the constitutional 13% to 7.5%.⁶⁷ For instance from January 2000 to April 2002 the federal Government of Nigeria released about N215.6 billion to the government of the South-South states in terms of revenue derivation from oil production. This represented 60 percent of the total revenue accruable to the states.⁶⁸ What happened to the remaining 40 percent or N143.74 billion of the derivation fund not released? Compared to Pre-1954 whereby regional governments had autonomy over their resources, the current arrangements only serve to alienate the Niger Delta region from having the full benefits of their resources giving rise to inequalities and the cry of marginalization among the people.⁶⁹

The Niger Delta is also entitled to a 2 percent ecological fund from the Federation account (to respond to the ecological problems of the entire country) of which 90 percent should be channeled to address the ecological problems in the region. However, the funds have not been fairly utilized to reflect the mounting ecological problems in the region and which is mostly a result of oil exploitation. The South-South people’s conference (an advocacy group for the Niger Delta region) also noted as follows:

“…..in the disbursement of ecological funds for example, the Lagos Bar Beach Project and the Ogunpa re-channelization project both in the South-west alone have taken more than what has been disbursed to all the projects in the whole of the South-South.”⁷⁰

The important point is that Nigeria’s power equation has not in any way, favoured the Niger Delta region from independent to April 2011 after which we had the emergence of Dr. Goodluck Ebele Jonathan in 2011.

It is seen that while all other regions in the country have produced President since 1960, the column for the South-South was nil until after the emergence of Jonathan in 2011. The question of who gets what depends on the level of political power a region commands and this has not been the case with the Niger Delta Region.

Table: Nigeria’s serving presidents by region (1960 – Date)

Source: Adopted from E. M. Akpabio & N. S. Akpan 2010 and updated by J. Sagay 2013.⁷¹

Politiking with oil related policies and wealth distribution

The emergence of the Niger Delta region as an oil producing area within the Nigerian nation led to some policies primarily aimed at given the central government considerable amount of controlling power over resources. One of such policies is the land use decree of 1978, which vests the ownership and control of all land in Nigeria on the federal government. Although the land use decree succeeded in unifying the law relating to land tenure system in Nigeria, the timing of its emergence has raised some questions of security of tenure especially when the minority issue is raised in a multi-ethnic society such as Nigeria. It has been argued that the transfer of property right to the government by virtue of section 1 of the Act has placed limits on communities abilities to make decisions about their surroundings.⁷²According to the World Bank Report⁷³ “Without tenure of security, resources are over used or over developed leading to environmental degradation and rural improvement.” Today, the fundamental question on the Land Use Decree borders on the justice surrounding its present day relevance, in the face of persistent environmental degradation occasioned by petroleum exploitation in the oil rich region. Following Article 1 of the Geneva Convention on territorial sea and the contiguous zone (1958), it would appear that oil spills from offshore drilling and which causes damage and destruction that affects the territorial sea is the exclusive business of the Federal Government of Nigeria by the Land Use Act.⁷⁴ In this matter the coastal inhabitants are the direct victims in many ways. They suffer the loss of fish, which may not only be the basic source of their food but their livelihood. In the same vein, oil spills that destroy crops on land will raise the question as to who has the radical title, whose employment of land is being interfered with? Is it the governor that claims for his fellow citizens as a constructive trustee or must the affected people show a statutory or customary right of occupancy as an evidence of interest in land? The decree itself is oppressive and cannot in any imagination be said to further the cause of empowering the people region as the interests and concern of the oil producing communities are placed beneath those of oil corporations and the Nigerian treasury.⁷⁵

Politically, this is one of the instruments of ethnic domination and disempowerment given the fact that the decree was brought into being when oil started becoming the mainstay of Nigeria’s economy. Other oppressive decrees that have been used against protest and opposition in the region include; the detention decree, treasonable offence decree and many others. The treasonable offence decree was effectively used in executing Ken Saro-Wiwa and eight other activists for championing the resource control and environmental justice cause on behalf of the Niger Delta people. Even at the dawn of democracy in Nigeria, these decrees and laws have not been repealed as the total number of representatives of the region at the National Assembly cannot constitute a simple majority to counter the prevailing ethnic politics and domination by other regions. The problem now is how to control the massive consciousness of the people and the calls for ‘resource control’, which in most cases have degenerated into violent conflicts.⁷⁶

Corruptive leadership style in Nigeria: Niger Delta case

The role of government in promoting good governance and ensuring effective distribution of wealth in the Niger Delta anchors on the overall quality of leadership. Over the past three decades, Nigeria has passed through circles of leadership changes and challenges, with the military dominating the scene. The command style and characteristics in the military worked against the emergence of democratic governance founded on public participation and individual/institutional accountability. Consequently, there was massive corruption and suppression of genuine protests especially bordering on the Niger Delta ‘questions’. Such state of irresponsible governing system culminated in the execution of Ken Saro Wiwa along with eight other Niger Delta activists by the late General Abacha in 1995 for protesting against government and oil companies neglects of the numerous ecological problems incidental to oil exploitation in the region. While the military regime lasted in succession, there was absence of enabling environment for the development and maturation of efficient public institutions that were truly sensitive to the Niger Delta Problem.⁷⁷

A sign of relief was to come on May 1999 when Nigeria transited to a democratically elected system of governance. This period coincided with the cry over persistent marginalization and subsequent demand for resource control by the people. The period is best captured by NDDC as follows: “the long years of neglect and deprivation, coupled with the insensitivity of some previous government and oil companies as well as the failures of previous development intervention agencies, had created by the late 1990’s a volatile atmosphere characterized by protests, agitation and communal conflicts. By 1998, the Niger Delta region had become a lawless zone, where youths disrupted oil production activities at will and communities frequently engaged, with little provocation, in destructive inter and intra community strife.”⁷⁸ During his first campaign visit to the region, Olusegun Obasanjo (then president, then presidential candidate) made a promise that when he became the President, he would establish a programme that will deal urgently and fundamentally with the developmental needs of the region and bring sustainable prosperity and peace to the area. Following his election and inauguration as president in May 29, 1999, he made good his promise, and within two weeks of his inauguration, he sent to the National Assembly, a Bill to establish the Niger Delta Development Commission (NDDC) as the agency to implement a programme for the sustainable development of the region.

Years after, the Niger Delta region could not move beyond decades of developmental neglects and backwardness, both in term of infrastructure and the general well being of the inhabitant. Throughout the period of Obasanjo administration, there were numerous leadership questions bordering on transparency and accountability in managing the nation’s oil revenue as well as the necessary political commitments to the development of the region. In the first instance, Obasanjo personally and unilaterally presided over the ministry of petroleum resources as against the normal practice of being headed by cabinet minister. Consequently, their was accusation and counter accusation bordering misappropriation, misapplication, embezzlements, bribery, running of secrete and illegal accounts and poor accounting procedures in the oil sector, in total disregards of relevant rules, regulations and standards practices. These were variously captured in Newswatch in relations to Petroleum Trust Development Fund (PTDF) as follows:

“….one area which created immediate suspicion was the PTDF account. Under the Act, one percent of all payments from oil block sales were supposed to go for PTDF activities in manpower development for the petroleum and gas sector. Newswatch, however gathered, that Obasanjo did not allowed all accruals from one percent to be paid to PTDF but rather pegged it at $ 100 million per annum. He never sought the approval of the National Assembly to divert the excess from the one percent to other matters”⁷⁹

In another dimension, the magazine reported as follows:

“One notable feature of the Obasanjo’s administration for which it was roundly condemned was the keeping of some secrete accounts which simply became honey pots for personal enrichment and aggrandizement of key officials. A case in point was the PTDF account which was a subject of open dirty name-calling between Obasanjo and Atiku Abubakar, his deputy. The office of the vice-president originally supervised PTDF before Obasanjo stripped him, the then Vice President in a letter to the National Assembly that accused him of mismanaging the funds ……but Abubakar fired back. He said the culprit was his boss who had taken over control of the place and actually bought a new car for a female friend from PTDF money. The excess crude account operated by Obasanjo’s administration wears another source of abuse. The account was opened when the price of crude oil hit the roof at the international market far beyond the benchmark upon which Nigeria’s budget was predicated. The Revenue Mobilization and Fiscal Allocation Commission, RMFAC, has not been comfortable with the running of special accounts by the federal government.”⁸⁰

In view to dissecting also the problem of the management of developmental agencies in the Niger Delta region, “leadership corruption” can not be speared. In Nigeria as a whole, it has manifested in various forms at high and low places. It is not even different within the Niger Delta Development Commission (NDDC) which was set up to specifically respond to the developmental needs of the people. Few years ago, the former chairman of the (NDDC) was suspended for alleged involvements in a whopping 800 million naira JuJu scandal to retain his seat and command supports at higher hierarchies of power (Daily Trust 19 August, 2008: Suspended NDDC boss charged over 800 million naira theft).⁸¹ The implication of these is that the total revenue accruing from oil for the developmental needs of the region is not always properly accounted for. Few people in the ruling class control the oil wealth while the greatest number does not enjoy the benefits but ecological degradation. As oil is the mainstay of the Nigerian economy, the impact of poor leadership corruption tends to capture and deprive the people of the benefits of resource exploration.

In the study, it is observed that while the Niger Delta region remains the engine of Nigeria’s economy, it however suffers infrastructural and ecological neglects. Its “minority status” has systematically marginalized and disables its influence in the overall national politics which is characterized by ethnic domination. Oil wealth in Nigeria has become synonymous with poverty in the producing regions. These are fundamental issues of governance. Different models, theories, assumptions and information are often used to proffer solutions to the Niger Delta problems. These do not often work, owing to failure in governance. The rising cases of violence, kidnapping and conflicts in today’s Niger Delta explain the incursion of wrong policies as well as absence of “fair shares” and “fair play” in the distribution of their “God-given” resources. Who are those making decision for and on behalf of Niger delta people? What are the contents of such decisions and in whose interests are such decisions and decision-makers advancing? These are all political questions on environmental and developmental decisions and are at the root of the Niger delta problem.

The study also reveals and observes that though many governments have not been sincere in addressing the problems in the oil-producing areas, yet the little the government has done towards alleviating the sufferings of the people in these areas, failed with a particular reference to OMPADEC. This may have aroused by lack of commitment, inadequate funding, mismanagement of funds, over politicization of policies and appointments, lack of clear focus on the part of the government and its agencies. Literature exposed that, each development agency set up for Niger Delta areas ended up as nothing more than an avenue to fat some pockets at the expense of the region. What is of utmost essential is that, eminently qualified and tested technocrat (not politicians) with proven professionalism in project delivery and public works managements. Somebody who has a thorough appreciation of the problems to be addressed and the correct level of transparent commitment, level-headedness and morally stable in administration is required to serve all interest groups fairly and without bias.

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